Russian oil companies use Bitcoin, E-Sard and USDT for cross-border payments between China and India

Russia has begun using codes for the oil trade between China and India, which is trying to bypass western sanctions, Reuters reported on March 14, citing sources familiar with the issue.

According to the report, some Russian oil companies have resolved Bitcoin, Ethereum and Stubcoin transactions like Tether’s USDT. This strategy simplifies the conversion of Chinese yuan and Indian rupee into Russian rubles, allowing for smoother transactions despite financial constraints.

Usually, Chinese buyers deposit their yuan in an offshore account managed by the yuan. The funds are then converted into code and transferred via multiple accounts before reaching the final destination in Russia, where they are exchanged for rubles.

These transactions reportedly reach tens of millions of dollars per month.

The adoption of crypto in the Russian oil trade remains limited, but that is part of a wider trend. Over the past year, the country has introduced new regulations governing crypto mining, taxation and international trade.

Western sanctions imposed on Russian military operations in Ukraine have accelerated this shift towards digital assets. However, industry sources suggest that oil companies could continue to use cryptocurrency even if sanctions are lifted due to efficiency and trading speed.

The challenges of the digital ruble

Russia is increasing its dependence on crypto for trade, but its Central Bank Digital Currency (CBDC) project faces major hurdles.

Last month, central bank governor Elvira Naviurina announced an indefinite delay in launching the digital ruble. She attributed the setback to the need for further improvements to ensure that the currency benefits all stakeholders.

However, recent research shows that the launch of the digital ruble has been postponed due to insufficient IT infrastructure for the banks that were expected to handle the project.

A survey of Russian banking experts has revealed that 30% of financial institutions are not yet ready to support the digital ruble. Experts explained that to implement CBDC, banks need to upgrade their IT systems to handle increased transaction volumes.

Meanwhile, 20% of bank IT specialists said their systems are fully equipped with digital rubles. Another 50% said they were partially prepared, but they need to upgrade further.

At the same time, approximately 14% of respondents expressed concern about potential information security risks related to currency.

Given these challenges, Russia’s national digital assets initiative could face further obstacles unless major financial institutions are fully prepared for their adoption.

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